Dealing with a Dishonest or Uncooperative Trustee or Executor

Here is a link to an article by Janet Brewer on a topic that never goes away or out of fashion: how to deal with a dishonest or uncooperative fiduciary, Click Here.

And, as chance would have it, I had a discussion about just this topic with another attorney today. Unfortunately it has been my experience that some trustees and executors just don’t behave like the fiduciaries that they are. These problems typically occur in split or divided family situations where there have been multiple marriages and/or where the children haven’t gotten along for years.

In a situation with significant assets at risk, where a trustee or executor steals, or makes clearly unwise financial decisions, or fails to distribute assets after it is clearly time to do so, the decision to file a legal action isn’t so difficult to make. But it is expensive to pursue your rights in court. And in many cases the assets at risk are not so significant, or the trustee or executor’s wrongful actions are more in the nature of delay or lack of cooperation.

As the trustee or executor uses the trust or estate assets to pay his or her attorneys fees, and squandering assets as he or she does so, the beneficiary who is out of luck must retain counsel on his or her own nickel. While it is true that the court could ultimately charge the trustee or executor personally with his or her attorneys fees, such a determination typically is not made until after there has been a finding of fact, i.e., a trial. And in many situations, such as when the trustee or executor delays or is uncooperative, it typically isn’t clear how the court will ultimately decide.

I believe the best way to move these situations to resolution is to have a proactive probate judge who promptly and early in the case issues appropriate orders, such as the exchange of information that has been delayed or withheld, timetables for actions to be completed, and accountings. Most judges are not willing to make such orders early enough in a case. In fact, in my experience, I can only recall one judge who did so as a matter of practice, typically at the first hearing. And those early orders had nothing to do with who was right or who was wrong – the purpose was to get information produced to expedite the case, and reach settlement or determined right and wrong more quickly.